The Capitalists' use of Taoism to undermine China's Independence; Lee Kwan Yew's Complicity in the "Asia Crisis" Peter Myers, Canberra, November 19, 2000; update September 4, 2010. My comments are shown {thus}; write to me at contact.html.

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(1) Ted Galen Carpenter & James A. Dorn, China's Future: Constructive Partner or Emerging Threat? (2) Lee Kwan Yew's Complicity in the "Asia Crisis" (3) Chalmers Johnson on the "Asia Crisis"

The Wilsonian-Capitalist One World Government forces try to get inside the minds of those opposing them, to give them reasons within their own way of thinking, why they should surrender to the laissez-faire economy run by those capitalist corporations.

The following quotes are from a book encouraging China to do just that, by misinterpreting the Taoist philosophy to equate it with capitalist laissez-faire.

(1) Ted Galen Carpenter & James A. Dorn, China's Future: Constructive Partner or Emerging Threat?, Cato Institute, Washington 2000.

{p. 150} Although China has a long way to go toward a free society, there is ample evidence that the PRC is moving in the right direction and that economic liberalization has lessened the danger of war and enhanced the prospect for peace. That said, one should not be under the illusion that free trade will solve all problemsÑtrade is a necessary but not a sufficient condition for global stability and peace. The Republic of China (Taiwan) is one of the PRC's largest trading partners, but no one is naive enough to believe that the mainland would not go to war with the ROC if that country declared independence. Yet one could argue that the threat of conflict has been diminished by cross-strait trade and investment, as well as by the strength of Taiwan's national defense and an implicit guarantee of U.S. intervention. The sufficient condition for peace is that China change its political regime to one based on the rule of law and limited government, so that liberty prevails rather than a system that spawns corruption. Whether that change occurs will ultimately depend on the Chinese people, but the probability that it will occur can be increased by strengthening commercial ties, spreading the use of information technology, and allowing China to enter the World Trade Organization on mutually beneficial terms. Commercial diplomacy, not gunboat diplomacy, is the key to China's future as a constructive partner rather than an emerging threat. It would be a mistake to diverge from the path of liberalizationÑ indeed, human rights in China are best secured by openness to the West. Isolating China could turn it into another North Korea or Cuba. Trade is a constructive way to change China. But trade is a two-way street, and the West must remove its restrictions as well. Finally, in deciding on its future path - whether liberal or illiberal - China should look back to its own heritage and grasp the principle of noninterference and recognize the importance of spontaneous order, if it is to achieve economic and social harmony.

The Principle of Noninterference

Writing more than 2,000 years before Adam Smith, the great Chinese philosopher Lao-tzu, in the Tao Te Ching, advocated the principle of wu wei (non interference) as the basis for good government and a harmonious social order. Although he did not provide a detailed theory of the "invisible hand" of the free market, he did

{p. 151} recognize that there is a natural tendency for mutually beneficial trade if people are left alone. Peace and Prosperity follow naturally when the government safeguards property rights, rules justly, and lets markets operate freely. The idea of spontaneous order is central to Lao-tzu's way of thinking. He clearly recognized that overregulation can upset the spontaneous market order and destroy the wealth of a nation: "The more restrictions and limitations there are, the more impoverished men will be." The wise ruler therefore knows that, "Through my noninterfering, men spontaneously increase their wealth." If Lao-tzu had read The Wealth of Natlons, he certainly would have understood Smith's central argument that, if "all systems either of preference or of restraint" were ''completey taken away," a ''simple system of natural liberty" would evolve "of its own accord." The principle of wu wei is consistent with an individual's natural rights to life, liberty, and property and implies that the proper function of government is to protect, not deny, those rights. The private space of each individual is protected to bring about peace and prosperity. Thus, "when the world is governed according to Tao," individuals will pursue their happiness through markets, and resources will be used to satisfy consumers' preferences. Trade is the natural way for individuals and nations to increase their wealth. But "when the world is not governed according to Tao," conflicts will result, and resources will be diverted from more productive uses. The principle of noninterference applies to all government action - in the private, social, economic, and cultural spheres. Limited government is the norm for natural order, unlimited government the norm for disorder.

The Market, Spontaneous Order, and Security

ln his essay "The Principles of a Liberal Social Order," F. A. Hayek wrote, "The central concept of liberalism is that under the enforcement of universal rules of just conduct, protecting a recognizable private domain of individuals, a spontaneous order of human activities of much greater complexity will form itself than could ever be produced by deliberate arrangement." He warned against trying to plan the market ...

{end quotes}

The capitalists' ploy is very cunning, because the Tao Te Ching does indeed advocate a policy of non-interference; but it does not advocate anarchy - the abdication of government, its abrogation to the owners of money. Far from it; Lao Tzu had the welfare of the people in mind, not wealth. Money does not buy happiness.

His book is, to a large extent, a manual for rulers. He is saying, "If you find yourself in a position of power, don't be a despot. Leave as many decisions as possible to the lower levels of administration, and to individuals in their own lives".

"Market forces" are not small players; they are a concentrated, privatised power. They are so big and powerful, that they can only be contained by big government. Lao Tzu would not have approved of those "Market Forces" any more than he approved of Big Government: he wanted people to have as much power as possible over their own lives. In a situation, however, where "Market Forces" do exist, and are very powerful, Lao Tzu would not have advocated surrender to them. Therefore the Chinese Government, which is responsible for the lives of more than 1200 million people, should see through this deceptive propaganda ploy.

Lao Tzu, however, is of some guidance. The management of China can draw on some Marxist principles, as a way of constraining the predatory "Market Forces", while avoiding the fundamentalism of Mao's years, with its rejection of China's indigenous culture. The Confucian tradition can be drawn on, to ensure that the Common Good takes precedence over individual claimants; while the Taoist tradition can be drawn on to restrain power at the top, to empower people in their private lives, to steel their minds to survive abuses of power above. Taoism teaches that, no matter how hopeless one's situation, one has some power over one's life, and in hard times one should have hope that things will turn out for the better in the longer term. The reason is that actions tend to balance one another.

(2) Lee Kwan Yew's Complicity in the "Asia Crisis"

1. Singapore's promotion of "Free Trade" has advantaged only the rich. Singapore is partly a base for International Capital headquartered in New York and London, but often nominally holed-up in tax-havens. These tax-havens get the rest of the world into debt to them, and are beyond the reach of democratically-elected governments. The whole institution of tax havens contravenes the principles of "The Open Society", but both are promoted and run by the same crowd. "Openness" is just a slogan to catch the unthinking, a deception behind which to mask the true situation. Some tax havens are geographical islands, like the Channel Islands, the Canaries, the Bahamas etc.; others are political islands, such the the City of London (which is a tiny part of London but has its own separate police force), Monaco, Liechtestein, and Singapore.

2. Singapore is also a centre for diaspora Chinese businessmen, by which they exploit the indigenous Malay population of Indonesia. During the "Asia Crisis", Indonesia's Chinese businessmen (who directly dominate the local economy, and are the middlemen for Japanese companies) took their money out of Indonesia and kept it in Singapore. This was money the Indonesian Government rightly regarded as Indonesian, and it was needed for investment so that Indonesia would be less dependent on loans from the IMF etc.

3. Lee Kwan Yew, as the founder and leading apologist for these dual roles of Singapore, has betrayed the people of Indonesia.

4. The Indonesian Government's "opening up" of its finance system to "Foreign Investors", as promoted by Paul Keating, Ross Garnaut and Lee Kwan Yew, made it vulnerable to speculators. In this, the poor suffered; the speculators and their mercenaries are responsible for the ethnic clashes that followed, and the likely breakup of the country, with massive dislocation of population and likely civil wars. The modern pirate uses his tongue, not a sword; wears a suit and tie, not an eyepatch. Deception suffices.

5. Dr Mahathir, in contrast, kept the speculators at bay. His policies promoting racial equality helped Malaysia to avoid the racial strife that swept Indonesia.

(3) Chalmers Johnson on the "Asia Crisis"

Los Angeles Times June 25, 1999

Let's Revisit Asia's 'Crony Capitalism' Economy: America's free-trade proselytizing is the true root of what is now a global crisis.


After all the endless mouthing off in the pages of the English-language business press about East Asia's "crony capitalism," the lack of "transparency" in Asian stock exchanges, the "no pain, no gain" logic of the International Monetary Fund and how the Asian economic challenge to Anglo American capitalism had fizzled, we now know that none of these things had anything to do with the Asian--now global--economic crisis. Addressing what did cause the crisis is the main business of the leaders of the countries of East Asia as they reflect on what has happened to them over the past two years. If they ignore this question and pretend that the road is still open to "globalization" in the Pacific, they risk being repudiated by their own people.

Here's the new explanation as it is developing in seminar rooms from Seoul to Kuala Lumpur to Beijing.

With the end of the Cold War, the United States decided it had to launch a rollback operation in East Asia if it was to maintain its global hegemony. The high-growth economies of East Asia had become the main challengers to American power in the region, and it was time they were brought to heel. The campaign worked in two phases. First, a major ideological barrage was launched to soften up the Asians. The Americans mobilized famous professors of economics from their universities, who never once faced a "market force" in their own lives, to preach the beauties of globalization; in this case meaning American economic institutions. These include total laissez faire, destruction of unions and social safety nets, staffing of regulatory agencies with retired financiers, indifference to the pay differentials between CEOs and the ordinary labor force, moving manufacturing to low-wage areas regardless of the social costs and totally unregulated flows of capital in and out of any and all economies. Ever since the Asia Pacific Economic Cooperation summit in 1993, the Americans hammered home to the Asians that they needed to "open up" their economies in these ways.

Then came phase two. Once the Asian economies had begun to "deregulate" and were standing in the world marketplace more or less naked, the "hedge funds" were let loose on them. These funds are actually huge concentrations of capital owned by very wealthy Western white men, who manipulate bewilderingly complex financial instruments called "derivatives." They usually locate their offices in offshore tax havens like the Cayman Islands and do everything in their power to avoid regulators or tax collectors in the so-called free market democracies. The funds easily raped Thailand, Indonesia and South Korea and then turned the shivering survivors over to the IMF, not to help the victims but to ensure that no Western bank was stuck with "nonperforming" loans in the devastated countries. The IMF is also the U.S. government's chosen instrument for "reforming" these countries to make them look more like New York.

The Americans suspected that all this might cause some trouble. On March 4, 1998, Adm. Joseph Prueher, then commander in chief of American military forces located in East Asia and today the U.S. ambassador-designate to China, testified before Congress that the U.S. military was on alert for "early signs of instability" in East Asia, including "labor disputes." The Indonesian armed forces, whom Prueher's special forces had been training for years, got rid of Suharto when it seemed necessary. The Indonesian troops killed about 1,200 shopkeepers and raped more than 150 Chinese women doing so.

But then it all got a bit out of hand. One of the biggest hedge funds proved to be so greedy that the U.S. government had to organize a bailout for it, which brought the scheme out into the open. David Mullins, a former deputy to Federal Reserve Chairman Alan Greenspan, had gone straight to work for the Long-Term Capital Management fund after he left the Fed in 1994. Had this not been the case, it's unlikely that the Federal Reserve Bank of New York would have arranged a $3.5-billion rescue package for the hedge fund. The incestuous relationship between Washington and Wall Street--what Columbia University economist Jagdish Bhagwati calls the Wall Street-Treasury complex--made East Asia's crony capitalism look tame.

The weakened economies of East Asia also could not continue to buy the weapons the Pentagon wanted to sell them, and some began to have second thoughts about paying to keep U.S. Marines (a.k.a. the Hedge Fund Protective Corps) in their countries. Globalization was discredited as a crooked financier's scam. The Chinese never looked so clever as they did in keeping out of the World Trade Organization as did the Japanese when they more or less ignored the pleas for "reform" from Washington.

These issues came to a head in Kuala Lumpur in November 1998. The U.S. trade representative, Charlene Barshefsky, accused the Japanese of offering $30 billion in aid to the stricken countries of East Asia as a way of buying their votes against further market-opening measures. The Japanese foreign ministry responded that the U.S. government was possessed by "an evil spirit," a phrase painfully close to the evil empire epithet that former President Reagan used against the Soviet Union. Vice President Al Gore then gave a speech in the Malaysian capital, denouncing its head of state for trying to protect his country from international speculators and calling on the people of Malaysia to overthrow him. After that, APEC no longer had a future worth speaking of.

The Americans do not seem to understand that their message of free trade and market economics is in serious disrepute. Wall Street itself now looks like the ancestral home of crony capitalism.

Chalmers Johnson Is President of the Japan Policy Research Institute in San Diego. His Forthcoming Book Is "Blowback: the Costs of the American Empire" (Henry Holt).

More from Chalmers Johnson on Japan, and on the Asia Crisis: johnson.html.

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